EK Business Tendency Survey: Business outlooks point to an economic turnaround

According to the Confederation of Finnish Industries’ (EK) July Business Tendency Survey, Finnish businesses’ estimates of the business cycle have improved since the spring but remain poor. Correspondingly, the business outlook indicator has risen and is now to close to zero. This indicates a cyclical turnaround, as expectations have historically been a good predictor of the business cycle. The economic outlook will remain weak for a while, however, as the downturn has been difficult.

“The weakness of the Finnish economy should come as no surprise to anyone. For a long time, businesses have seen the economy perform worse than generally forecast. Now, the business outlook is stabilising, which means the economy has bottomed out. We are making slow progress towards a better economy,” says Sami Pakarinen, Director at the Confederation of Finnish Industries.

Production and sales have declined in recent months. However, companies expect growth in the last quarter of the year. Of the main sectors, only construction is expected to see a decline in output span the entire year. Businesses estimate that weak sales performance will lead to a reduction in personnel numbers during the rest of the year.

“Sofar, the service sector has shielded the Finnish economy and employment from major blows. Now it seems that manufacturing is taking on a bigger role. Construction is still down, but falling interest rates are slowly bringing relief to this sector as well,” says Pakarinen.

There is currently only one real obstacle to business growth, and that is insufficient demand. Fifty-two per cent of the responding companies reported poor demand as a barrier to growth. While problems with the availability of skilled labour have continued to ease with the economic downturn, there were some signs that availability is growing worse in construction.

“In the coming months, there may be mixed messages about the economy, which is a sign of a cyclical turnaround. Finland is starting to overcome low confidence and that is good news, as stronger confidence will boost the economy,” Pakarinen says.

EK Business Tendency Survey

The Business Tendency Survey is published four times a year by the Confederation of Finnish Industries (EK). The survey has been carried out regularly since 1966. It is part of the European Commission’s Joint Harmonised EU Programme of Business and Consumer Surveys, which is partially funded by the EU. The survey concerns activity in Finland. In July 2024, the Confederation of Finnish Industries asked businesses to evaluate their business outlook for the second quarter of 2024. A total of 1,081 companies employing about 250,000 people in Finland responded to the survey.